MP3Tunes.com founder owes $41M in copyright suit

A New York federal jury clobbered San Diego digital music entrepreneur Michael Robertson with a $41 million judgment on Wednesday for infringing on the copyrights of roughly 2,100 songs, lyrics and album cover artwork.

The hefty damage award comes after a seven-year legal battle between Robertson and Capitol Records, EMI Music and several other record labels and music publishers. Last week, the jury found that Robertson and his now-defunct MP3tunes.com online music locker infringed on record label copyrights. This week, jurors determined damages.

Robertson vowed to continue the legal fight. “I am obviously disappointed in the jury verdict and will pursue every opportunity to get it overturned because they’re wrong,” he said in an email response to questions. “We believe that they are unsupported by the law in virtually every respect.”

Efforts to reach the record labels and their lawyers were unsuccessful. But the large damage award clearly marks a victory in their long-running battle against Robertson, who has been a music industry nemesis since he founded MP3.com back in the mid-1990s.

MP3.com, an online digital music company that went public in 1999, also was sued by record labels. In 2001, it was sold for $372 million to Universal Music, which later shut its doors.

This case began in 2007. A key issue centered on a feature on MP3tunes called Sideload. It searched the Internet for free music — including promotional tracks uploaded by record labels themselves. Sideload then let MP3tunes customers add those tracks to their music lockers at no charge.

Over the years, U.S. District Judge William Pauley limited the scope of the case. He trimmed the number of potential copyright violations from thousands to a few hundred songs, and he reduced Robertson’s liability to less than 50 songs that he personally uploaded into MP3tunes via Sideload.

But a decision last year in a different copyright case switched momentum back to the record labels. They asked Pauley to reconsider the limits in light of a ruling in a lawsuit between Viacom and YouTube. That paved the way for the jury to hear testimony on whether Robertson and MP3tunes had engaged in “willful blindness” and ignored “red-flag” warnings of copyright infringement on thousands of tracks.

Last week, the jury found that Robertson and MP3tunes had indeed turned a blind eye. Since MP3tunes was liquidated during a 2012 bankruptcy, Robertson is liable for the bulk of the damages.

Robertson called the statutory rules for determining copyright damages — up to $30,000 per song for unintentional infringement and up to $150,000 for willful infringement — a travesty.

“Without proving even $1 in harm, (record labels) can claim tens of millions in damages,” he said. “It’s why they are still suing me personally even after the company has gone away. It’s why there are so many copyright lawsuits. It’s a perversion of our legal system and this verdict illustrates that.”

Judges sometimes reduce damages awards, said Michael Hoisington, an intellectual property attorney of the San Diego law firm Higgs Fletcher & Mack. He added, however, that it’s hard to say what might happen in this case. “Forty-one million seems like a lot of money, but that’s a lot of music that they downloaded,” he said.

In addition to copyright damages, Robertson also may be on the hook to pay the record labels’ lawyers.

“As long as the verdict stands, they will get their attorneys’ fees,” said Hoisington. “I would guess those are in the millions, and they are typically awarded in copyright cases.”